48 cents below

“The statutory demand is set aside, and, on condition that the creditor commences fresh proceedings within 28 days to recover their outstanding debt, the debtor company must pay $2,000 into court.”

This was the finding of a recent NSW Supreme Court (“SC”) case (called Wabbits).

Two things to note:

1) In the last 2 months, there is an uptick in statutory demands or winding up cases being set aside; and

2) It is rare that a court will impose a condition to pay money into court.

So why the uptick?

It seems to be that some creditors are using statutory demands as a litigation tactic, rather than as a means to recover undisputed debts.

Examples last 2 months:

– Genuine dispute (18 April, Federal Court) + (13 April, NSW SC) + (23 March, QLD SC) – Invalid service of statutory demand by ATO (6 April, Federal Court)

– Assigned debt dispute (16 March, NSW SC)

– Debtor company clearly solvent (16 March, NSW SC)

Why the $2,000 condition?

The Court found that the debtor had a genuine dispute in relation to $403.52.

This meant that the undisputed portion of the debt was 48 cents below the statutory minimum of $2,000 for a statutory demand.

The c$2k payment into court was to give ‘comfort’ to the creditor to start fresh debt recovery proceedings within 28 days.


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